Series 63

B - withdrawal applications generally become effective 30 (not 60) days after it is filed. However, the withdrawal will not become effective until the Admin declares whether there are proceeding pending against the firm at the time the application for withdrawal is filed.

A BD has filed an application to withdraw its registration. WHich of the following statements is TRUE: A. The withdrawal will become effective within 60 days after the application is received by the Admin B. The withdrawal will become effective when he Admin determines whether there is an action for revocation of the firm's license pending at the time the application is filed C. By filing an application to withdraw, the firm agrees to settle all charges currently pending without admitting or denying them D. The Admin has two years after the date the firm's registration is withdrawn to initiate a proceeding for revocation of its license

C

A BD is opening securities accoutns for retail customers ata bank branch. According to the NASAA Model rules for Sales of Securities at Financial Institutions, what must the BD agents do as part of the account opening process? a. Verify that the client is a qualified investor b. Provide the client with a written copy of the networking agreement between the BD and the bank C. Make a reasonable attempt to obtain a written acknowledgement from clients that they have received the disclosures required under this rule D. Notify the client fo the address and tele phone number of the state securities admin where they can lodge complaints

I, II, III

A BD is registering a new issue with the Administrator of State A. What information must be sent to the Admin? I The number of shares II The Articles of Incorporation III The financials IV. The tax ID number filed with the IRS

B - Admin may not require that sales materials related to exempt securities, exempt transactions or federal covered securities be file. Munis = exempt securities

A BD may need to file all of the following material with the Admin EXCEPT: a. the prospectus for an oil and gas limited partnership b. the marketing material for a new issue of muni bonds c. the sales literature for an issue that will be sold within the Admin's state only D. a form letter distributed to an adviser's current clients explaining he benefits of a variable annuity

A -- CAN CHARGE INCENTIVE FEES IF CUSTOMER IS WEALTHY ($1mm OF ASSETS OR $2MM NET WORTH)

A Registered Investment Adviser (RIA) is formed as a partnership. The RIA intends to charge an incentive fee that is based on investment performance under NASAA rules, the RIA: A) Must be able to show that the fee is fair and reasonable to the State Administrator B) is not permitted to have an incentive fee udner any circumstance C) Can charge an incentive fee as long as it is included in the partnership agreement D) must offer the cusomter a fee refund if the performance does not meet the benchmark

I and III -- when a BD does a new issue offering, it must make a "bona-fide" sale to the investing public and cannot retain part of the issue for itself or for its employees. IF this were permitted, the BD would have the incentive to "underprice" the issue and then buy it for itself

A borker-dealer is a syndicate member in a best efforts underwriting of ABC COmmon stock. The issue is oversubscribed. The broker-dealer may aoolcate sales of the issue to: I employees of the issuer II employees of the BD III Officers of the issuer IV officers of the BD

I and II

A client is traveling and would like her investment adviser rep to pay some personal bills while she is away. Under the USA, such an activity: I. should be backed up in writing II Constitues custoedy III falls outside the scope of securities market regulations

B - offered only to accredited investors and no more than 35 non-accredited investors may participate in the offering. Accredited investors include: - individuals with an annual income of at least $200k during the last 2 years who reasonably expect to continue to earn that much in the future A married couple with a joint incomes of at least $300k who reasonably expect to continue at same level Individual or a couple with a net worth of at least $1MM

A hedge fund is being sold to investors as a private placement under Reg D. An agent believes that this funds would be an excellent investment opportunity for several of his clients. The agent may discuss the fund with which of the following clients: A. A newly retired man whose annual income last year was $200k B. A middle-aged couple who are both physicians with a joint annual income of $400k C. A young aggressive investor with a net worth of $500k and an annual incomes of $150k D. A couple that just won the lottery, whose annual income this year was $500k and whose net worth is $550k

B

A married couple is only 5 years away from retirement. They own a home but have not saved anything for their retirement. They consutl an agent of the BD about what they can do to catch up. What should the agent advise them to do? A. take out a home equity loan and invest the money B. Open IRA accounts and begin making the maximum possible contributions C. Purchase a deferred variable annuity D. Invest the max amount possible each year in aggressive growth stocks to catch up

II and III - No load MF may not have any front-end sales charges (loads) or any contingent deferred sales charges. It may have a 12b-1 fee as long as this fee does not total more than .25% of the fund's average annual net assets

A no load mutual fund has no: I. 12b-1 fees II. Front-end sales charges III COntingent deferred sales charges

A -- selling away (putting his customers into a security that his firm doesn't know about in a transaction that the firm is not supervising)

A registered securities agent has been contacted by an independent venture capitalist to obtain customers for a private placement that he is forming. Which statement is TRUE? A) the agent is prohibited from directing customers to the venture capitalist B) The agent is permitted to direct customers to the venture capitalist without restriction C) the agent is permitted to direct customers to the venture capitalist with the permission of the Administrator D) the agent is permitted to direct customers to the venture capitalist if the agent has posted a surety bond

B

A securities agents and an investment adviser have offices next door to each other. The adviser directs brokerage business to the agent for execution and in return, the agent rebates 10% of the commissions generated by these transaction. This practice is: A. Acceptable provided the agent is also registered as an investment adviser B. Acceptable, provided it is disclosed on the Adviser's Form ADV C. A violation of the USA D. Unethical according to NASAA

D - an ad such as this could only be an offer of a security in the state in which the newspaper is published (in this case, NJ). However, if more than 2/3rds of the newspapers circulation is outside of its state of publication, the offer is not considered to occur in any state.

A woman in Alabama is reading a daily financial newspaper containing an ad that could be interpreted as an offer to sell securities. The newspaper is published in NJ, but its circulation is spread evently lthroughout the US. According the USA, which of the following statements is TRUE regarding the ad A. The ad is an offer of a security in Alabama only if the issuer is domicile in Alabama B. The ad is an offer of a security in Alabama regardless of the domicile of the issuer C. The ad is an offer of a security in NJ only D. The ad is not an offer of a security in any state

B - only individuals who are registred agents may receive monetary comp frm a BD based on the sale of a security.

An insurance agent works in an office building down the hall from a BD. They are not affiliated. What compensation may the agent receive from the BD in exchange for referrals?

C - represetnatives includes anyong associated with an investment adviser who manages client accounts or portfolios or makes investment recommendations or gives advice about securities. It also includes anyone who decides what type of investment advice to give to clients or who solicits or negotiates the sales of these services. The senior partner might have these responsibilities or might be supervising people who are investment representatives but there is no indiciation in the question

ACE Investments is a registered investment adviser. Which of its empmloyees are considered investment adviser representatives? A. the clerical staff B. The senior partners C. The portfolio managers D. The custodial staff

C - not exempt from being an agent if receive commission

According the USA, if an employee of an issuer is soliciting employees of that issuer for the purpose of selling securities, which of the following statements is TRUE? A. the employee could receive commissions without being registered as an agent B. the employee would never be considered an agent of the issuer C. The employee would be considered an agent if she received commission or other renumeration D. If the employee was an officer or director of the issuer, she could receive commissions and would not be considered an agent

B

According to the Investment Advisers Act of 1940, an advisory fee that increases and decreases proportionately with the investment record of an appropriate securities index is called an: A. Participation fee B. Fulcrum Fee C. Index Fee D. REvolving Fee

C

According to the USA, an Admin is NOT allowed to demand that BDs do which of the following? A. approve their advertising prior to use b. Ensure that their advertising is maintained and available for inspection C. file their advertising related to federal covered secruities with their state admin prior to use d. Review their advertising for accuracy prior to use

I, II, III

According to the USA, which of the following persons has authority over a securities transaction? I. The admin in the customer's home state II The admin the BD's home state III The admin in the stat ewhere the transaction occured

D -- no place of business with only insurance = exempt

According to the USA, which of the following statements is TRUE? A. If an agent is hired away from his BD by another BD, only the new BD must notify the Administrator B. If an investment adviser representative is hired away from a federal covered investment adviser by another federal covered adviser, both advisers and the representative must notify the administrator C. only the employing adviser, not the IAR, must register in the state D. An investment adviser with no place of business in the state who conducts business exclusively with insurance companies located in the state need not register in the state

Advertising an Sales Literature

Administrator as the power to require the filing of all ________ & _____ ____

D - a certified financial planner selling securities to numerous individual clients, regardless of where trade or their net worth, is engaged in a nonexempt transaction. This would not be true if the financial planner's clients were all financial institutions rather than individuals

All of the following are exempt transactions EXCEPT: A. An administrator sells securities to liquidate an estate B. A client, upon his own initiative, requests a transaction in a security that is not registered in the state C. A lender liquidates securities that had been used to secure a loan that is now in default D. a certified financial planner sells Nasdaq securities to numerous high net worth individual clients

D - Endowment policies = insurance products not securities

All of the following documents may need to be filed with the Admin EXCEPT a. a prospectus for a limited partnership b. A pamphlet for an oil and gas program c. a brochure for a mining company d. An offering circular for an endowment policy

B

All of the following must be specified in the state registration statement of a security EXCEPT A) a stop order from another state that affects the offering of the security within that state B) the total amount of the security that will be offered in other states C) the amount of securities to be offered in the state D) the expected use of the projected proceeds of the offering

C -- it is true that assignemtn of the IA contract is not permitted unless the customer consents. If the IA is a partnership, the death or withdrawal of a majority of the partners constitutes an assignement. However, the death or withdrawal of a minority of the partners does not constitute an assignment

All of the following statements are true regarding investment advisory contracts EXCEPT: A) assignment fo the contract is not permitted unless the customer consents B) if the investment adviser is a partnership, the death or withdrawal of a majority of the partners constitutes an assignment C) if the investment adviser is a partnership, the death or withdrawal of a minority of the partners constitutes an assignment D) if the investment adviser is a partnership, the customer must be notified of any change in the membership of the partnership within a reasonable time

B

An Investment Adviser has adopted an external Business Succession Plan. Who is responsible for servicing the IA's client accounts if the managing director of the Investment Adviser suddenly dies? A) Another IAR currently in the firm B) Another IA Firm to which investment management has been transferred C) The custodian bank that holds client funds and securities positions D) An immediate family member of the deceased MD

A - only full discretionary authority allows an agent to withdraw money. An agent may not receive a fee for using his discretion in trading.

An agent holding limited discretionary authority over a customer's account may: A. Buy or sell securities in the account without consulting the customer B. Withdraw money from the account C. Receive a fee for using his discretion in trading the account D. Borrow assets from the customer's account

C -- sale of unregistered non-exempt securities is a violation of the act which incurs civil liabilities only (NOT criminal penalies) the transaction is null and void and the seller is obligated to buy back the security at the original cost plus 6% interest

An agents sells unregistered non-exempt securities to a customer, and has the customer sign a waiver that staes that the"customer is aware that the securities are being sole without registration in a state and the customer absolves both the BD and the agent of any legal obligation for failing to comply with State law. Such a statement signed by the client: A) is permitted without restriction B) is permitted only after filing with the Administrator C) is null and void D) will subject the agent and the BD to civil liability and possible criminal penalities

A - must cite reasons found in state law to disqualify a person

An applicant for registration as an investment adviser indiciates that the firm will base its investment decisions on psychic readings and other nonfinancial criteria. According to the USA, A. the admin may deny/postpone registration only for those reasosn specified in the law B. The Admin may act in the public interest and deny registration c. The admin must review the track record of the applicant to ascertain the feasibility of such criteria for investing D. the Admin should encourage alternative methods of analysis and grant registration if there is a reasonable basis for this methodoloy

C - individual not considered an agent if the individual represents the issuer effecting EXEMPT transactions (or exempt securities or selling only to fellow employees without commission)

An employee of an issuer is selling common stock of that issuer to institutional buyers and is being paid a commission. Under the USA, which of the following statements is TRUE? a. The employee would be considered an agent of a BD and would need to register B. The employee would be considered an agent of the issuer and would need to register C. The employee would not be considered an agent of the issuer and would not need to register D. The employee would be considered an agent of the issuer but would not need to register.

D -- an agent is an individual who represents a BD selling any type of security, whether it is exempt or non; Individuals who represent issuers in trading exempt securities or in exempt transactions are not defined as agents. Thus, only an individual who represents an issuer selling non-exempt securitiers (for examples, that issuer's common stock) to the public is defined as an agent; An individual who represents an issuer in a transaction with existing employees without taking a commission is engaging in an exempt transaction and therefore is excluded from the definition of an agent. The example here is an issuer-employee that works in the pension department of the company and who places employee purchases of the company shares into employee 401k accounts

An individual who represents an issuer in selling securities of that issuer to the issuer's employees; and who does not earn a commission for this work; is defined under the USA as a(n) A) agent B) BD C) issuer D) none of the above

C

An investment adviser is managing a trust that is scheduled to terminate in 50 years. The beneficiaries will receive the income that the trust generates until that time. Once the trust terminates, the corpus will be distributed among the remaining beneficiaries. According the Uniform Prudent Investor Act, which of the following investment strategies is NOT suitable for this trust. A. Allocating the portfolio between stocks, FI securities and cash equivalents B. Dividing the trust assets among several different MFs C. Investing in Treausries and MM securities D. Reallocating the portfolio on an annual basis

D

An investment adviser need not register in a state if it has A) no palce of business in the state and only advises employee benefit plans with less thant $1MM in assets B) no place of business in the state, does not direct business communications in the state, and advises more than 5 high net worth individuals located in the state C) a place of business in the state and advises fewer than 5 banks D) no place of business in the state and advises 15 insurance companies located in the state

D - order ticket must include client's account number, time and price at which the order was executed (to the extent feasible) and time ordered was entered.

An order ticket must include all of the following info EXCEPT: a. the account for which the order was entered b. the price at time at which it was executed c. time of entry d. authorization of a registered principal

D

Any adviser who is instructed by an existing customer to limit losses in the customer's account should: A. Sell off 50% of the customer's portfolio B. Buy more of what the adviser feels is appropriate for the customer C. Guarantee the customer against loss D. Do none of the above

Yes

Are broker dealers permitted to make loans to customers?

No -- unless done through an affiliated entity that is a regulated lender (parent bank or affiliatede BD)

Are investment advisors permitted to make loans to customers?

unregistered securities sold by unlicensed individuals -- High Yield investment Programs (Fraud)

HYIPs are typically:

A

If an agent changes his place of employment from one BD to another, the registration must be transferred: A immediately B within 10 days C within 30 days D within 90 days

B - must benefit the client

In a soft-dollar arrangement between an adviser and the BD, the BD would be permitted to pay; A. The cost of a coach flight for a portfolio manager to attend the conference B. The cost of a conference concerning the future of the computer software C. The cost of computer terminals used to deliver market data services D. A percentage of the salaries of the advisers internal research staff

B

In order for an investment adviser to maintain custody of funds and securities: A. the firm must have a three year track record of no violations B. The investment adviser must notify the Admin and there must be no rule against custody C. The Admin must give permission the IA D. At least $100k in T-bills must be posted as security

III only - Mary's suspension has ended. Insolvency could be used as grounds for denial, but the Admin msut find that the BD is insolvent, not an individual controlling person.

Jeff White and Mary Johnson have formed a corporation to start a new BD. They are the sole shareholders. Which of the following grounds could the Admin use as a basis for denying their application? I Jeff's liabilities currently exceed his assets and his is having trboule paying his bills II 3 years ago, Mary's agen tlicense was suspended for 2 weeks III 8 years ago, Jeff pled guilty to one felony count of tax avasion IV Neither Jeff nor Mary has previous experience in operatind as a BD

Name of the person at the IA who recommended the transaction, Name of the person who placed the order; date of order entry; name of account for which order was entered; name of BD or bank to which the order was sent for execution; whether the order was discretionary

NASAA states that IA order tickets must contain:

A

No Civil Liability exists under the USA if a(n): A) Issuer offers to sell a security in violation of the Act, but no sale occurs B) agent omits a material fact when selling a security C) terminated agent affects securities transactions for customers before associating with another registered BD issuer sells a security without registering the issue in that State, relying on the incorrect advice of counsel that the issue was exempt

A

Peggy is an agent at a BD. She also spends several days every month conducting business on the premises of a retail bank. According to the NASAA Model rules for Sales of securities at Financial Instituions, what precautions must be in place for Pegyg to continue to do business at a bank branch? a. Peggy's work area should be segregated from the area where retail deposits are taken whenever possible. b. the bank must apply for, and be granted, special limited registration from the state securities Admin C. disclsorues that securities products are not SIPC-insured must be prominently displayed in the branch D. there are no special provision for employees of BDs who sell securities in bank branch offices

D - FINRA fines are only against FINRA members and their associated persons

Persons who violate federal insider trading regulations are subject to all of the following penalties, EXCEPT a. treble damages b. prison terms c. civil lawsuits by traders d. FINRA fines

D - but disqualified if in last 10 years

Prior felony convictions must be disclosed on Form U4 if the conviction occurred:

5 business days after the filing with the state is completed

Registration by Filing becomes effective:

B - not in sales

Sue Whitman is a high ranking official in the Comprtoller's Office of Zanzibar Securities. Her title is Executive VP. Under the Uniform Securities Act, Mrs. Whitman is: a. An agent since all officers of a securities firm are considered agents B. Not considered an agent since she is not involved in sales or trading C. Considered an agent but would not have to pass a qualifying exam D. Not an agent but could accept unsolicited orders

A

The Administration, by order, can deny an exemption from registration for all of the following EXCEPT: a) muni bond issued by another state, sold in the Administrator's state B) isolated non-issuer transaction C) transaction with a bank trust department D) private placement

D

The State Adminstrator is supervised by: A) Secretary of State B) Governor of the State C) NSMIA D) NASAA

B

The amount of commission charged to a customers to effect a securities transaction must be disclosed: A) prior to executing the transaction B) ont eh trade confirmation C) on the account statement D) on the form 1099

D

The max civil penalty for insider trading violationsis: a. $5MM and /or 20 years in prision b. $25MMc. $10k and or 5 years in prision d. treble damages

II and III -- To register as an agent in a State, the Admin can require the passing of an exam and can require the posting of a surety bond if the agent will be handling discretionary accounts or taking custody of customer fund

To register an agent in a State, the Administrator can require which of the following I Minimum net capital II Surety Bond III Qualifying written or oral exams

D - NASAA does not set rules for federal covered advisers - only the investment advisers act of 1940 applies!

Under NASAA rules, which of the following records must be retained for 5 years by a Federal Covered Adviser? Communications to 2 or more persons ORder memoranda C Cancelled Checks D. None of the Above

B

Under USA, an agent is permitted to sell securities for more than 1 BD: A) only if the types of securities offered by each BD are mutually exclusive B) only if the agent is separately registered with each BD C) only if one BD solely offers exempt securities and the other BD solely offers non-exempt securities D) under no circumstances

I, II, and IV

Under USA, investment advisory contracts: I must be in writing II cannot allow for payment to the adviser based upon capital gains in the account III cannot allow for prepaid advisory fees IV cannot be assigned to another investment adviser without customer approval

2 years

Under the NASAA Model Rule covering Investment Adviser records, the adviser's articles of incorporation must be retained for how long after the adviser ceases business operations

I, II, IV -- investment adviser is not permitted to lend money to a customer, unless the investment adviser does so through an affiliated "regulated lender". An affiliated BD is regulated under Reg T and can lend money to a customer; as can an affiliated bank. An Adviser can lend monies to its officers or employees because they are not customers

Under the NASAA Statement of Policy on unethical practices, which of the following investment advisers would be able to loan monies where securities are collateral for the loan? I An investment adviser that has a registered broker-dealer that lends money to a customer through the broker-deal er affiliate II An investment adviser that is a subsidiary of a parent bank that lends money to a customer through the bank affiliate III An investment adviser that is a partnership lends money to a customer under the provisions of Reg T and the Fed Reserve Board IV An investment adviser that is the corporation lends money to its officers

D

Under the USA, a person could give advice about all of the following securities without having to register in the state as an investment adviser EXCEPT: A) Treasury Bonds B) Ginnie Mae Pass-Through Certificates C) Fannie Mae Debentures D) State General Obligation Bonds

B

Under the USA, a person effecting transactions in commodities: a. is subject to oversight by the Admin B. does not emet the definition of an agent C. avoids the definition of agent only if the person's duties are merely clerical d. Is automatically considered an agent if her employer is a BD

B -- if the newspaper is not poublisehd in the state, or if the newspaper is published in the state but has more than 2/3 of its circulation outside the state during the last 12 month. Since this is a "local" newspaper, the offer is only made in the state where published

Under the USA, an advertisement for advisory services published in a local newspaper is: A) not considered to be an offer B) an offer only int eh State where the newspaper is published C) an offer in any State where the newspaper is distributed D) an offer in the State where the advertiser is headquartered

C -- administrative personnel are not registered making Choices A and D incorrect. IN choice B, the secretary is taking a "message" while in C, the sales assistant is taking an "order"

Which individual would most likely be required to be registered as a representative of a broker-dealer? A) An administrative staff person involved in back-office support work B) A secretary taking messages to buy and sell securities C) a sales assistant taking an order for a limited partnership unit D) a staff person who reports completed trades to customers

D -- Under USA, many transactions are exempt from the requirements of the Act. Generally, exempt transactions are those that do not involve the public. ONe of the empt transactions is a trade with Financial or Institutional investors. Institutional investors DO NOT have to have minimum assets of $5MM (though this is easy to confuse with the exemption from registration granted to investment advisers that render advice to pension plans with assets of at least $1MM); Accredited investor is a concept of the Federal private placement exemption (Reg D) of the Sec. Act of 1933. It has no applicability to State law

Under the USA, for an account to be considered by the Administrator to be "institutional," it must: A) purchase only the securities of the US government of its agencies and political subdivisions B) have assets fo at least $5MM C) meet the definition of an "accredited investor" D) Be designated as such by rule or order of the Administrator

B

Under the USA, if the Admin prohibits an investment adviser from taking custody of customer funds or securities, the investment adviser would be permitted to: A) buy securities for a customer using the investment adviser's monies, and then delay delivery of those securities to the customer b) Buy securities for a customer who has given a limited power of attorney to the adviser using monies deposited by that customer to an account established by the adviser specifically for that purpose C) hold customer fudns in accounts established and maintained by the adviser that have been segregated and properly identified D) accept a prepaid advisory fee of $500 from the client covering a period of up to 1 year

IV - exemption for stock listed on the Toronto Stock Exchange

Under the USA, which of the following issuers must file a registration statement with the state Admin? I. Corporations with stock listed on the Toronto Stock Exchange II. Federal Savings and Loan Associations III Federal Credit Unions IV For profit corporations

I, II, III, IV - An unincorpated investment club and the US government are specifically listed as persons in the act.

Under the USA, which of the following would be considered to be a person: I AN unincorporated investment club II An individual who buys and sells securities only for his own account III Associations and partnership whether or not they issue certificates IV the US governemnt

B

Under the provisions of the USA, required records for broker-dealers must be kept in accordance with the provisions of the: A) Securities Act of 1933 B) Securities Excahgne Act of 34 C) Investment Advisers Act of 1940 D) Uniform Securities Act as adopted in that State

I, II, III

Uner the NASAA Statement of Policy on unethical practices, the release of customer info to which of the following would NOT be "unethical" I SEC II Internal Revenue Service III Self-Regulatory Organizations IV Registered Broker Dealers

D -- The act defines individuals who represent issuers effecting securities transactions with the public as "agents" who must be registered. D meets this definition. The Act exempts from licensing as an "agent," those individuals representing who do not deal with the public. Thus, individuals representing issuers who deal solely with underwriters or financial institutions are not defined as "agents" who must be registered. Also, individuals who represent issuers of exempt securities (governments, agencies, municipals) offering these securities to the public are exempt from State registration. Finally, an individual who represents the issuer in selling securities of that issuer to that issuer's employees (as long as no commissions are paid)

Which individual would NOT be exempt from the definition of an "agent" under the Uniform Securities Act? A) An employee of a corporation who processes 401(k) contributions, issuing shares of the company's stock to the company's empmloyees B) An issuer official of the City of Pittsburgh who authorizes the sale of a new issue of general obligation bonds to the public C) An officer of a privately held company who authorizes the sales of shares of the company to an underwriter D) An officer of a publicly held company who offers the company's bonds, which are rated AA by an NSRO, to the public

I and II -- RE Condo minvestments can be considered to be a security when the condo is managed by a third party for profit. Commercial paper is also defined as a security. However if it has a mautiry of nine months or less, is used in amounts of $50k or more, and is rated in one of the top 3 rating categories, it is exempt

Which of the following are NOT defined as securities under the USA? I Individual Iretirement Accounts II Keough Plans III Commercial Paper IV Real Estate Condominium Investments

I only - the only other federally covered in registered investment companies

Which of the following are federal covered securities? I Investment company issues II Insurance company issues III Bank Company Issues

I, II, III, IV - Agents, issuers and banks are not BDs. Also, a person with no place of business in a state and who deals only with institutional investors is not a BD

Which of the following choices is NOT a BD in state B? I. An agent in state A who contacts a client in state B II A corporation that sells commercial paper every other week in state B III A BD registered in state A, where its only office is located, which has only insurance companies as clients in state B IV A bank trust department that buys and sells securities for its customers

B

Which of the following choices would be required to register as a BD in State B? A. A BD with no offices in STate B and whose only clients are other financial institutions B. A regional BD with offices in States A, C, D, and E only, and five retail clients who reside in State B C. An employee of ACDE Securities, who handles client accounts D. A corporation that issues stock to the public

I, II, III - a broker-dealer by definition is not an agent; an individual who sells US gov securities while employed yb the issuer is not an agent because those are exempt; an individual who represents an issuer in a nonexempt transaction is an agent unless done in an exempt transaction

Which of the following entities is NOT an agents as defined in the USA? I A broker-dealer acting on behalf of a properly registered issuer II An individual employed by the FED to sell US government securities III An individual employed by the issuer who sells nonexempt securities in an exempt transaction IV An individual who represents an issuer in a nonexempt transaction

C - The USA authorizes the governor or legislature of a state to designate an agency or person as Administrator (or Commissioner) to the administer the act in the state. The SEC is the federal agency, not state agency that oversees and regulates securities on a national level

Which of the following entities is responsible for the administration of the USA in a state? A) State Judiciary system B)The Executive department C) The Administrator D. Securities and Exchange Commission

B -- an agents is an individual that represents a BD or issuer effecting securities transactions. The Act exempts from licensing as an "agent" those individuals who do not deal with the public. Thus, individuals representing issuers who deal solely with underwriters or financial instutions are not defined as "agents who must be registered. The secretary who takes message to buy and sell securities for an agent is a sales assistant that must be registered. The sales associate that accepts order for limited partnership units (which are securities) is clearly an agent

Which of the following individuals would be defined as an "agent" udner the USA? A) A secretary who works for an agent taking telephone messages to buy and sell securities B) a sales associate who accepts orders for limited partnership units being offered in a private placement C) an employee of a coporation who processes 4019K) contributions, issuing shares of the company's stock to the company's employees D) A CFO of the issuer that negotiates with an investment banker to set the terms of an additional share offering

C -- If a security is defined as "exempt" under the USA, then it is not required to be registered in each State where offered. If a security is a "federal covered security," then it cannot be required to be registed in each State where offered (though the State can require a notice filing and payment of a filing fee). Muni bonds are an exempt security. The other 3 choices are federal covered securities.

Which of the following is NOT a federal covered security? A_ An offering made over the coutner of $250MM of 10% convertible debentures of ACME Corp, a company whose common stock is listed on the American Stock Exchange B) A private placement of $250MM of debt backed by automobile finance company receivables sold to investment managers that are qualified purchasers C) an offering of $250MM of General Obligation bonds by the City of New Orleans to the residents of Louisiana D) An offerings of $250MM of common shares of a Mutual fund that will be offered to the public

I, III, IV - a coporation that proposes to issue securities and has not is still considered an issuer; merely proposing an issue is enough

Which of the following is an issuer of securities? I A corporation that proposes to issue securities but has not as yet II A BD who trades for the Accounts of others III A new company that offers shares to the public IV A company offering shares in a primary transaction exempt from registration

C -- an agent can't publish and distribute reports detailing the performance of recommended transactions. BDs on the other hand can do so but the State Admin can require the filing of these reports

Which of the following is an unethical business practice: A) PUblication of a tombstone announcement by a BD in the local newspaper on the effective date of a registered new issue offering managed by that BD B) Publication of a research report by a BD that shows the performance of prior recommendations made by that BD during the prior 12 months C) publication of a report by an agent detailing the performance of transaction recommended by that agent over the prior 12 months D) Publication of a report by a BD written by an agent detailing the performance of transactions recommended by that agent over the prior 12 months

C - a bank, agent, and issuer are all sepcifcally excluded from the definition of a BD. IA has no specific exclusion

Which of the following persons is NOT excluded from the definition of a BD under the USA? a. bank b. an agent c. an investment adviser d. an issuer

II and IV -- to be defined as an "agent" under the USA, an individual must take, or solicit orders from the public. Individuals who do not solicit the public or who solely perform clerical or managerial duties, do not fall under the definition.

Which of the following persons would be defined as "sales representatives"? I A clerical employee of a broker-dealer who does not effect securities trades and does not receive commissions II A clerical employee of a broker dealer who effects securities trades and receives commissions III A partner of a broker-dealer who does not effect securities trades and who receives commissions IV A partner of a broker-dealer who effects securities trades and who does not receive commission

I, II - an administrator can, on a summary basis, suspend a pending registration but may not issue a stop order without a prior notice and an opportunity for a hearing. Cancellation is different from revocation. Cancellation is not a result of disciplinary action and occurs when the registrant no longer exists, ceases to do business, is declared mentally incompetent or can't be located

Which of the following statements are TRUE? I An administrator can suspend a pending registration on summary basis II An administrator may not issue a stop order without prior notice and opportunity for hearing III An administrator may cancel a registration for the same reasosn the Administrator revoked or suspended a registration

C

Which of the following statements is TRUE regarding the bond that is required to be posted under the USA as a condition for registration? a. It protects clients against losses b. It protects against brokerage firm fraud C. it is used to cover the costs of possible legal actoins D. property can be accepted in leiu of a bond

D - Sanctions for violations are administrative proceedings, judicial injunctions, and civil and criminal prosecuritons. No individual, whether technically defiend as an investment adviser or not may deceive another personw ehn providing investment advice if he is compensated. As long as there is no advisory client relationship, people can deceive each other and not violate USA

Which of the following statements regarding brokerage and advisory activities under the USA are TRUE? I It is not unlawful for an adviser or broker to employ any device, scheme or artifice to defraud in the sales of ecurities to institutional investors because the USA is designed to protect individual investors II Under the USA, it is unlawful for an investment adviser to deceive a person when not providing advice to that person III Sanctions for both investment advisers and broker-dealers include administrative proceedings, judicial injunctions and civil and criminal prosecutions IV It is unlawful for any person, whether technically defined as an investment adviser or not to deceive another person for compensation as to the value of securities

C - USA says that the security that the investor received as a bonus would be considered a stock offering. stock dividends is never an offer or offer to sell a security

Which of the following would be considered a stock offering? a. investor receives a cash dividend b. an investor receives a stock dividend c. an investor who purchased bonds receives stock as a bonus d. an investor who opens an account at a bank receives a free savings bond

I, II, III

Which statements are TRUE about registration of Investment Adviserse? I An adviser with no place of business in the State that limits its clientele to insurance and investment companies is exempt from registration II BDs can act as investment advisers without registering as such if any advice given is solely incidental to the business of the broker-dealer III Investment Advisers must register with the State

C

Your client is planning a two-week fishing expedition. HIs friend appears at your office with a handwritten note from the client, giving the friend trading authorization over the account. According to the USA A. This is too informal B. A persona can't grant a temporary authorization to another person if they are not related C. Because the authorization is in writing, it is acceptable D. Only clients who prepay their feees can grant authorization